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Troubling Saudi bid for Plastics

Editorial

Posted:
03/28/2007 03:08:11 AM EDT

Wednesday, March 28

The purchase of GE Plastics by a Saudi Arabian firm would likely be the worst case scenario for the sale of the company, and not just because this would be another American firm sold to a foreign interest. The company's strong ties to the Saudi government, which while nominally anti-terrorist has leaked money to terrorist groups and individuals, should set off alarms about the rumored sale.

The London Financial Times reported that Saudi Basic Industries Corporation, or Sabic, the largest petrochemical producer in the Middle East, is preparing a $12 billion bid for the corporation, whose headquarters are in Pittsfield. Sabic has been at the forefront of the effort in Saudi Arabia, a leading oil producer, to diversify into other fields, plastics among them.

Business and industry are nationalized in Saudi Arabia and 70 percent of Sabic is owned by the government in Riyadh. While the government is nominally a U.S. ally, there are indications that elements of the government back al-Qaida, and there is no disputing that funds have found their way into terrorist coffers. The primary route is through Islamic "charities" the government has been slow to crack down upon, and leadership has in general been reluctant to combat terrorism since Sept. 11, 2001, when two planes packed with Saudis crashed into the twin towers of the World Trade Center.

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The House of Saud is in trouble of its own making, which accounts for its foot-dragging. With most of the country's great wealth concentrated among its jet-setting leadership, a generation of young Saudis with little or no hope for the future have been ripe converts to the message of al-Qaida. The state-run religion of Wahhabism, which opposes modernization and reform, has stunted the country's social growth and made its practitioners the natural enemy of countries like the United States that encourage technological innovation. It is not out of the question that the ruling government's international businesses will fall into the wrong hands in the near future.

It is safe to say that Sabic and its overlords in Riyadh will have no loyalty to Pittsfield and the 420 employees of GE Plastics here, should the sale go through. GE doesn't necessarily have to sell to Sabic, but if it offers the best bid, stockholders concerned only with their dividends will undoubtedly demand it, and with GE CEO Jeffrey R. Immelt on the record that the Plastics Division is up for sale not because it is unprofitable but because it isn't profitable enough, corporate headquarters won't concern itself with the greater good.

Surely Washington would step in? Not given the complex business ties the Bush family has had with the Saudi ruling family going back to the first President Bush. These links have prompted the Bushes to overlook all manner of Saudi behavior that has enabled the growth of terrorism within its borders. There may be nothing to stop a sale that has many possible ramifications, none of them good.

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